For U.S. cotton industry, it’s all about staying positive

The U.S. cotton industry has taken a few hits from acreage decline, volatile markets, competing crops and strange weather in recent years, but for producers and others surveyed at the Beltwide Cotton Conference in New Orleans, it’s all about staying positive.

For those in the Southwest, optimism is not whether the rain gauge is half-empty or half-full, as long as it’s not full of dust.

“No. 1 on everybody’s mind is the long-term drought,” said Danny Davis, a cotton producer from Elk City, Okla., and 2001 High Cotton Award winner. “We were very blessed to get some rain in July and August and end up with 600 pound to 650 pounds for dryland cotton this year. If we would have had one more rain in September, we might have had a lot of 2-bale, dryland this year. It was a perfect year for cotton other than it was short on moisture.”

The two previous years of drought weren’t so generous, Davis noted. In fact, 2011 was complete disaster, marking the first time in four generations the Davis family farm “didn’t take a bale of cotton to town. It wasn’t a lot better than that in 2012. We harvested about a fourth of the cotton we planted. This year, we harvested every row.”

If the drought continues to negatively impact the Southwest, Davis is concerned about the potential loss of cotton infrastructure through mergers and buyouts. “We have to travel longer to get parts. It’s not that it’s good or bad, but it is decreasing our efficiencies.

“There’s not a lot I can do about the water. Every time I sit down to have a meal, we pray for a rain. We know the Good Lord will take care of us. That was very obvious this year, and I can’t explain it in any other way.”

Southeast Arkansas

Andrew Wargo, business agent for Baxter Land Co., in southeast Arkansas, says Baxter Land Co., growers have shifted away from cotton in a big way, but could be coming back somewhat in 2014. “Our cotton acreage was reduced approximately 75 percent in 2013,” Wargo said.

There have been advantages in shifting from cotton to crops like corn and soybeans, including “moving cotton away from monoculture status, which has helped soil health. Some of our land needs the benefit of a corn rotation to put more vegetative matter back in the soil.”

Because corn prices declined significantly over 2013, cotton could start to regain some acres in 2014, Wargo said. “It’s about economics. When corn gets much below $5 a bushel, with our costs of inputs and irrigation, it doesn’t cash flow real well. So if the corn price stays depressed, and cotton prices stay where they are, I see some shifts among our growers this year to grow more cotton. We won’t be near where we once were. It would take a dollar or better to get a major shift.”

Breakthroughs in yield potential as well as new methods to minimize input costs could also help, Wargo noted. “We’re going to have to unlock the key to some really major yield increases. The Good Lord gave them to us this year. We were up a bale-plus over normal. We don’t know that we can sustain that. We had the same varieties we had in 2013. We just had a totally different growing season.”

Wargo said the use of cover crops both for weed control and fertility, if workable, “could reduce our fertilizer input cost. We have to have a better economic picture, and it needs to happen quickly enough that we don’t lose infrastructure. We’ve lost one gin in our area this year, and another that opted not to run. Some of the pickers and harvest equipment have been liquidated. Some are still available on equipment yards.”

O.A. Cleveland, professor emeritus, Mississippi State University is bullish on cotton. “We are due to see a decade or so of acreage that is 1 million to 2.5 million acres more than what we saw last year. I also think we’re not going to lose more infrastructure.”

Cleveland sees a corn market coming back into balance, after prices shot up in 2012 and early 2013 due to “very untimely droughts around the world combined with the ethanol mandate. Price ratios are now coming back to where they used to be, which will bring in more cotton.”

U.S. cotton producers continue to have an edge over other cotton-producing countries, Cleveland said. “Given technology, the United States will be a reasonably low-cost producer year in and year out, decade in and decade out.”

Cleveland doesn’t see a return to 15 million to 16 million acres of cotton in the United States in the near future due to the potential for area expansion in other countries. “But cotton in my opinion will continue to be a very bright commodity.”

Infrastructure

Tim Price, executive vice president of the Southern Cotton Ginners Association, said the Mid-South has not lost critical infrastructure, but is making adjustments to an acceleration in mergers and acquisitions. “We have not lost any areas where a farmer cannot get to the gin.”

Price says much of the uncertainty in agriculture today is the result of U.S. producers adjusting to changes and/or potential changes in the farm bill. “What we forget is that every time we go through this process, farmers think of new and better ways to do things that they would not have thought of if they didn’t have their backs against the wall.”

With its technology and infrastructure, the U.S. cotton industry “has such a head start on the rest of the world,” Price said. “Once a person gets bitten by the technology bug and sees its effect on the bottom line, they are hungry for the next level of technology. That is our economic system. It rewards and encourages technology.”

According to Price, the U.S. cotton industry, and agriculture in general, needs to tell the general public a different story than one it’s told in the past. “There is still a heartwarming degree of affection for the American farmer. But the story can’t be that we are the 2 percent that produces for the 98 percent. We have to stress that our productivity as an industry makes us strong as a nation. We should talk more about what agriculture means to the United States and the world.”